Well after all that waiting it’s now official. I’m going to be a dad for the second time around early May (Yes I’m excited). Yet a major issue with this will be my wife runs her own daycare, which will close during her maternity leave. So how do I pay for a 13 month leave for her when she won’t get a dime of Employment Insurance money?
The good news is daycare books are looking alright with some extra cash we can use. We estimate we could currently use about $2500 from that account to help cover the leave. I estimate we need about $400/month while she is off. So that would mean I’m about $400 x 13 -$2500 = $2700 short. So with about 8 months to save for that we can easily put the cash together in time.
Another issues is I want to take off some time as well after baby is born. Since I can use parental leave without taking any time away from my wife I’ve decided I want to take two months off. The cost for this is a bit steep since I’ll only get six weeks of EI during this time (2 weeks waiting period) and then I will be at the maximum you can claim which is $1167 after tax (see Mike’s post on Four Pillars to get an idea where I got this number from). During those two months we can still use my wife’s maternity leave money, but that still leaves me around $4600 to save.
So in total I’ll need to save $7300 in eight months for us to take the time off we want. Can I do this? Yes if we stay fairly close to our current spending and I reroute most of the early retirement savings over to baby leave savings. So it looks like I’ll lose a total of 10 months of early retirement savings to pull this off. Is it worth it? Absolutely! I will have no regrets at all taking this opportunity to spend it with my family as it expands.
Yet what happens to my retirement plans? Well I haven’t run through the entire calculations yet, but I would estimate the impact would be around 2 years. It could be worse, but until the little one arrives I won’t know how our spending will fall out and the total impact to my plan.
As if that wasn’t enough. That is only Plan A. My wife also gave birth to our first 10 weeks early, which means she is at a higher risk to have baby #2 early. So I’ve also need Plan B, which may mean we don’t reach our savings target for Plan A. The backup plan is a bit fuzzy at this stage, but I can use vacation time to cover part of my leave and I have to see if my work offers any top up to my parental leave.
This should be interesting. I’ll keep you all posted on how things turn out.